There was some relief as the Bank of Japan’s policymakers met earlier this week to discuss potential strategies to stem the rise of the yen, but voted against any direct intervention. With concerns about falling international payment revenues returning once more, the issue is likely to be high on the agenda again next month. The bank’s governor commented “we are aware that Japanese exporters have been significantly affected by the yen’s strength,” but the rise is being closely monitored.

It is seen that Online Forex exchanges may also have benefited, as conventional spot transactions, which are widely used to give an up-to-date image of currency trading, leapt 48 per cent over the period in question. Forex trading appears to have improved in the middle-eastern financial markets, as commodity trading in the area expands and creates demand for business and leisure travel. Experts say the next week might prove good for the dollar, as speculators seek safe investments due to caution ahead of key US financial data releases. 

The amount of things that can be done with Forex charts is daunting. They even have scary terms such as “Fibonacci”, and “moving averages”, and “oscillators and indicators”, and “Elliot Wave Theory”. These are only some of the varieties of analysis tools technicians use to keep the common Forex trader confused and out of their face.

These are all great tools, and when learned, certainly come in handy for long term successful Forex trading. But none of them are absolutely, positively, necessary in order to use a Forex chart. All you need is a pair of eyes and a ruler if you’re not using an online Forex chart, you really should be, it can tell you all sorts of things and good Forex trader will always refer to them, particularly if things have not gone as expected.

A good technician can look at a Forex chart and tell you where you went wrong with that last losing trade. You rarely want to know where you went right on a profitable trade, who cares? You made money but it can be a pointer to future good trading! But all too often it’s when the Forex trader loses money that he needs to know why and it is always easy to find a technical guy to point it out for you on the Forex charts, you will learn a lot!

There were some negative signs in the U.S. economy last week. The unemployment rate increased. Initial claims increased by 12,000 over the previous week. The Dow Jones Industrial Average was down 0.87 percent for the week while the S&P 500 dropped 0.70 percent. The Nasdaqa was 0.29 percent higher.

Last Thursday’s high of 1.2932 continues to cap rallies in EUR/USD and the pair is now testing uptrend support from the June lows. A bounce to the 50% Fibonacci level around 1.30 remains the best bet but a fall below the 50-day moving average at 1.2714 would be a sell signal.

The recent track record of retail sales suggests to Citi that the reading probably will not mark a turning point. Retail sales has surprised by more than 0.4% on the upside 6 times over the past year. In none of those instances did the release appear to mark a major turning point in fixed income or equity markets and only once did Citi see a significant rally in stock prices following the release.

The news source states “Sterling is still being driven by the dollar and risk sentiment,”
and underperforming the euro a little, the weak housing data may have had an effect also causing Sterling being “negative.” Further a recent survey indicated asking prices for homes in England and Wales declined by 1.7 per cent in August following an oversupply and the usual seasonal dip in demand.

Last week the Bank of England’s governor Mervyn King downgraded his economic growth forecasts and raised inflation expectations.

While such rhetoric does not represent a break from previous comments and hews closely to the language of the G7/20, Citi say that the concentration of comments is much greater than has been the case to date. It isn’t clear if this means Japanese authorities view the 85 region as a ‘line in the sand’, but it does suggest they may be moving towards a more acute phase of verbal intervention.

The Pound Sterling fell against both the US dollar and the yen, all in the wake of these concerns. The Nationwide consumer confidence index dropped to 56 in July from the previous value of 63. The median forecast value was 60. The pound was also weakened as the forecast of the Federal Reserve about the slower US economic growth increased the concerns about the global economic recovery.

GBP/USD dropped from 1.5849 to 1.5776 today as of 8:54 GMT, while GBP/JPY fell from 135.43 to 134.40.